Energy drink stocks have an uncanny habit of beating the broader market. But something seems to be amiss in this formerly thriving sector nowadays.

The big names come with stellar performance credentials. Celsius Holdings (CELH -4.41%) brewed up a 243% total return in 2023, way ahead of the S&P 500 (^GSPC -1.11%) index's total return of 9%. Monster Beverage (MNST -0.23%) is one of the top 10 price performers over the last 20 years with a compound average growth rate (CAGR) of 29.8%.

But the energy drink specialists don't look so caffeinated in 2024. Monster's stock is down 20% year-to-date and Celsius is taking a 30% haircut. The S&P 500 gained 13% over the same period, so I'm not talking about a general market crash.

Is this the new normal for energy drink investments? Or is it just a quick price correction, setting the stocks up for greater gains in the long run? And which stock is the better buy right now? Is it the grizzled veteran or the health-conscious newcomer?

Let's find out.

Why Monster's stock is down in 2024

Monster has been sliding all year long. The company missed Wall Street's consensus earnings targets in two of the three earnings reports published this year, and last week's second-quarter miss inspired a large sell-off of Monster's stock. Share prices fell 10.9% that day.

Management has cited foreign currency exchange rates as a persistent headwind. For example, standard net sales increased 2.5% year over year in the second quarter -- but the revenue boost jumped to 6.1% when adjusted for currency exchange effects.

Overseas markets consistently account for roughly 41% of Monster's total sales, so the company's results can take big hits when the U.S. dollar's value is rising in comparison to target-market currencies. This year, hyperinflation in the Argentinian peso accounted for 63% of Monster's unfavorable exchange rate effects.

But growth is growth. Monster co-CEO Hilton Schlosberg noted that energy drink sales are growing while other drink categories experience a broad slowdown. Consumers view energy drinks as an "affordable luxury," Schlosberg said, and continue to splurge on them even though the sales volume is shifting from higher-priced convenience stores to affordable dollar stores and mass-market retailers.

Given these active headwinds, it's no surprise Monster's stock is down in 2024. Currency exchange rates are not doing Monster any favors right now, and more price-sensitive consumers are picking up their caffeine-packed drinks through less profitable channels. The business has seen better days.

Management is taking action to restart the stalled sales growth, though. Monster is launching several new drink flavors in the fall and raising American unit prices by approximately 5%. The increases may look risky, given the price-sensitive nature of the consumer market in 2024, but this modest boost covers all distribution channels. To make up for the price change, a few more consumers might move their Monster buys from gas stations to grocery stores as a result. They still seem prepared to keep buying this affordable luxury item.

Market winds are always changing. Some secular trends work in Monster's favor while others are holding the company back. The comparative value of the U.S. dollar won't rise forever and the ever-fickle consumer market could place more value on convenience over cost savings again. These changes may not happen in 2024 or next year, but Monster is a large and stable business with deep pockets.

This company should thrive as long as people want energy drinks. Hence, I'm tempted to buy some Monster stock in this deep and lengthy price dip.

How Celsius fared with its health-conscious focus

Celsius's stock started 2024 in high spirits, rising nearly 80% year-to-date in March and May (with a retreat to 30% in between).

The Celsius chart has pointed firmly downward since the local peak in May, though. The usual flow of strong earnings and revenue surprises dried up with a pair of disappointing reports in February and May. Celsius investors are worried about slowing sales growth over the last year.

This company faces the same headwinds as Monster, but from a very different angle. Still rolling out a PepsiCo (PEP 0.29%) distribution partnership, the availability of Celsius products in convenience stores rose by 43% in the first half of 2024, easily outweighing a 4% decrease in foot traffic to that store category. International sales surged 30% higher year over year in the second quarter, but accounted for just 4.9% of Celsius' total revenues. The foreign contribution is so modest, management never even mentioned "foreign currency" in that earnings call.

Celsius' strategy is all about marketing and expanded distribution at this point. Its focus on natural ingredients and health-conscious drink recipes is working wonders as consumers are focusing on healthier food choices. There is a rising demand for sugar-free energy drinks, while full-sugar options have seen stalled growth in recent years.

So Celsius takes a more targeted approach to its high-octane growth. The healthy-foods focus adds a layer of complexity to its market appeal. That's good news as long as the health trend is going strong. At the same time, Celsius would suffer if energy drinks or healthy foods lose popularity someday. In other words, Celsius is a riskier investment and I'm not so sure it was built to last.

Are you sure Celsius can match Monster's staying power?

Celsius Holdings may be the hotter name in Energy drinks right now, building a nationwide presence swiftly through its Pepsi partnership. The potential for international growth is nearly untapped so far. A 30% price cut makes Celsius stock a good-looking bet on the twin market trends of energy drinks and health foods.

At the same time, the company must manage its health-focused approach carefully and the total addressable market has to be smaller with that limitation in place. Its prospects looks great in the next couple of years. Will it last for decades? Maybe not.

Monster still relies on an unpredictable consumer trend, but energy drinks have shown remarkable resilience for more than two decades already. Locked in a global market struggle with privately held rival Red Bull, Monster looks poised to perform in the long run.

How much longer can Celsius keep up its furious growth sprint? I'm not so sure, and that's why I'd rather own Monster stock in the long run.